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Do Biopharmas Abuse the Orphan Drug Act? Debate Resurfaces

New claims that biopharma companies abuse federal incentives to develop drugs for
rare diseases have rekindled the debate, but the FDA and other stakeholders still
say the Orphan Drug Act program is a success.

A recent Kaiser Health News
report concluded,
"[T]he system intended to help desperate patients is being manipulated by drugmakers
to maximize profits and to protect niche markets for medicines already being taken
by millions. The companies aren’t breaking the law, but they are using the Orphan
Drug Act to their advantage in ways that its architects say they didn’t foresee or
intend.’ The study’s findings echo similar allegations levied in recent years, incuding
those by former Rep. Henry Waxman
(D-Calif.), the law’s chief sponsor
10 LSLR, 6/10/16
.

Food and Drug Administration spokeswoman Sandy Walsh told Bloomberg BNA in a Jan.
27 e-mail, “The FDA’s Office of Orphan Products Development takes seriously the mission
to help incentivize drug development for rare diseases. Overall, we feel the Orphan
Drug Act has been a success and that patients are benefitting from the research and
development, both on new drugs and re-purposed drugs, for rare diseases. There are
still thousands of rare diseases with no treatment options, and we are committed to
working toward the development of safe and effective therapies for these diseases.”

She added, “We have been aware of the concerns that have been expressed recently in
the news and are continuing to look at the appropriate application of the laws and
regulations.”

The debate raises the issues of whether drug companies are profiting unreasonably
in utilizing the ODA, the extent to which the law is helping drugs reach the small
populations that have these diseases, and whether the law needs to be changed.

Incentives Needed

Judith Hasko of Latham &
Watkins, Menlo Park, Calif., told Bloomberg BNA in a Jan. 25 e-mail, “This legislation
has provided critical incentives for investment in treatments for diseases that otherwise
likely would not merit that investment, in light of the limited numbers of patients
affected.” She added, “Given the complexity of both this law, other protections for
these products and the process of drug development, one would need to break down the
data summarized in the article into more specific components than it does to determine
whether the law is really being used outside/beyond its ‘intended purpose.’”

A spokeswoman for
Johnson & Johnson’s Janssen Pharmaceutical, whose rheumatoid arthritis drug Remicade is cited in the
KHN article, told Bloomberg BNA in a Jan. 26 e-mail that Remicade “has received 16
FDA approvals in the areas of gastroenterology, rheumatology and dermatology. Only
two of these 16 FDA approvals are for the treatment of orphan diseases.” She noted
that those designations “operated as intended to provide incentives to do the clinical
development work needed to meet significant unmet needs for relatively small populations.”

He added, "[T]he report has the benefit of bringing the government’s attention to
the ‘problem,’
which is exactly right. If there needs to be some greater scrutiny by FDA, or Congress
needs to tweak the law to prevent any ‘abuses,’
then that’s what should be done. But I suggest regulators or legislators tread lightly.
To me, it would be worse to prevent true orphan status for drugs that otherwise would
not be available for folks with rare diseases than for a company to make more than
Kaiser or someone else thinks they should. These are value judgments after all, and
it is easy to raise the clarion call against ‘obscene profits.’ But many times it
isn’t that simple, and I suggest someone—FDA, GAO [Government Accountability Office],
FTC [Federal Trade Commission]—look into it.”

‘People Have Hope Now.’

The ODA gives these incentives for development of drug products that affect small
numbers of patients:

a seven-year period of exclusivity, during which the FDA is prohibited from approving
an application for another product that is the same drug intended to treat the same
disease or condition;

tax credits;

grants for drug development;

fast-track approvals of drugs indicated for rare diseases;

expanded access to the Investigational New Drug Program; and

a waiver of user fees the FDA charges biopharmas under the Prescription Drug User
Fee Act.

To qualify for these incentives, the drug must first obtain orphan drug designation
and then be approved for the rare disease or condition that is the subject of the
designation.

According to
FDA data, the agency has granted 3,983 orphan drug designations since 1984. It granted 333
in 2016, nearly double what it granted in 2007 and 75 percent more than in 2012.

Waxman told Bloomberg BNA in a June 2016 interview, “People have hope now that they
didn’t have before for pharmaceutical therapies to help them and cure the diseases.”

The FDA revised its ODA regulations in 2013
07 LSLR, 6/14/13
, offering clarifications to avoid the possibility that some companies could “potentially
‘game’
approvals by seeking successive narrow approvals of a drug.”

Law Manipulated, Report Says

The KHN report said, “Today, many orphan medicines, originally developed to treat
diseases affecting fewer than 200,000 people, come with astronomical price tags,”
often at little cost to the biopharmas because some are mass market drugs re-purposed
to take advantage of the incentives of the ODA and the subject of multiple ODA submissions.

According to the KHN report:

more than 70 of the 450 FDA-approved orphan drugs were first approved for mass market
use and later approved as orphans;

more than 80 other orphan drugs were approved for more than one rare disease, with
separate and additional incentives for each approval;

altogether, a third of orphan drug approvals since the program began have either
been for re-purposed mass market drugs or drugs that have received multiple approvals.

Dr. Gayatri Rao, director of the FDA’s Office of Orphan Products Development, said
the agency would investigate these issues and consider a regulatory change, according
to the KHN report.

Criticism Previously Raised

The KHN’s criticism wasn’t entirely new. A
2015 commentary published in the American Journal of Clinical Oncology focused on cancer drugs including
Novartis’s Gleevec, which treats chronic myeloid leukemia and received nine orphan
drug designations. The commentary argued that the drug was never meant to serve an
orphan population. A Washington Post
article citing the criticisms appeared nine months later, and the KHN report five months
after that.

Waxman in June 2016 told Bloomberg BNA some companies are applying for multiple orphan
drug approvals for the same drug by narrowing a disease into smaller subsets. “There
are new cancer drugs that are narrowed down to treat people with a form of cancer
or form of cancer treatment that affects relatively few people,” he said, affording
drug companies an extra period of exclusivity.

In addition, many drugs that received orphan drug designations have become blockbusters
and are being used off label in a much broader population of patients than the law
intended, Waxman said, adding, “Orphan drugs are orphans no more; they’re very popular.
There are pharmaceutical companies that handle their whole business plan to make sure
their drug can be categorized as an orphan drug.”

Biopharma Associations’
View

A spokeswoman for the Pharmaceutical Research and Manufacturers of America (PhRMA)
told Bloomberg BNA in a Jan. 26 e-mail that the importance of the ODA is underscored
by the fact that only 5 percent of all rare diseases have an approved treatment

Responding to the KHN report, she said only one in five orphan medicines approved
in the last decade have a non-orphan indication in addition to their orphan indications.
“What is not often considered is the uncertain path of scientific discovery. The ODA
provides incentives for the long, complex and costly clinical trials that are needed
to demonstrate safety and efficacy.”

She added, “In some cases a company researching a compound for a rare disease may
find potential for another indication and pursue clinical trials for broader or additional
orphan indications, each of which requires additional clinical trials and are conducted
with no guarantee of FDA approval.”

The Biotechnology Innovation Organzation (BIO) previously addressed issues raised
in the KHN report in response to the August 2016 Washington Post piece, citing a
study by BIO, the National Organization for Rare Disorders (NORD ) and Ernst &
Young that found there would have been one-third fewer orphan drugs on the market
treating patients with rare diseases over the last 30 years without the incentives
found in the ODA.

BIO declined Bloomberg BNA’s request for comment on the KHN article, noting its previous
comments on the issues.

Sufficient Analysis Needed

Latham &
Watkins’ Hasko noted, “Rao’s statement that she wants to understand better the multiple
approval scenario before forming an opinion on whether it is being used inappropriately,
for example, makes sense. Her observation that the agency lacks resources to run appropriate
analyses of the orphan drug database is, however, going to hinder her ability to do
so, and whether in our current political environment legislators will be willing to
perform thoughtful analyses before implementing changes to the law is questionable.”

She added, “The Orphan Drug Act has provided valuable incentives for developing products
benefitting patients without alternative treatment options in a high risk industry,
and given the success of those incentives to date, any adjustments to the law should
be undertaken carefully after sufficient analysis and discussion with all stakeholders.”

The Johnson & Johnson spokeswoman noted to Bloomberg BNA when Remicade was approved
for its two orphan drug designations—for pediatric Crohn’s disease in 2006 and pediatric
ulcerative colitis in 2011—it became the first treatment option beyond conventional
therapy available for an estimated 150,000 children age six to 17 living with these
diseases.

Roche, which acquired 454 in 2007, closed down 454’s DNA sequencing technologies unit
in October 2013, laying off most of the staff.

To contact the reporter on this story: John T. Aquino in Washington at
jaquino@bna.com

To contact the editor responsible for this story: Randy Kubetin at
RKubetin@bna.com

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